OPINION: Indonesia-US economic ties likely to grow

Jakarta (The Jakarta Post/ANN) - With the US economy showing clearer signs of recovery, Indonesia's Ambassador to the US, Dino Patti Djalal, one of the most trusted aides of President Susilo Bambang Yudhoyono, says targets to double bilateral trade value in five years and increased US investment in Indonesia are both very likely scenarios. In a conversation in Washington with The Jakarta Post's Linda Yulisman, he elaborated his optimism and highlighted existing challenges to achieving the targets.

Below are excerpts from the conversation:

Question: What is the state of our current economic relations with the US, particularly in the trade and investment sector?

Answer: Economic relations are very good now, especially in trade and investment. If I'm not mistaken, our trade has reached US$26.5 billion in 2011 [up by 17 per cent from 2010], which is perhaps one of the highest, if not the highest trade figure that we have in our relationship. And the growth is quite significant, especially since [US] President Barack Obama's visit to Indonesia.

The rising investment is also significant. When Obama came to Indonesia, he said the US was not happy with being number three. US investment in Indonesia reached $1.5 billion last year [third largest after Singapore and Japan].

A lot of American businesses have noticed that Indonesia has now reached investment grade and that has significantly boosted our reputation in the US, especially at a time when the global economic recovery is still somewhat fragile and a lot of countries and companies are being downgraded. Indonesia is being upgraded.

I do also notice a stronger business interest in Indonesia. Indonesia is seen as one of the success stories in Asia along with China and India, of course. Indonesia is seen as not just promising, but a dynamic and unique market by American businesses and with that, a number of business delegations to Indonesia have returned with very good impressions. So, I'm quite optimistic that the economic relationship for the future will be even better.

Trade and investment are also now a key part of the joint commission meeting [JCM] that has been held annually. We have six working groups and trade and investment is among them. For the first time, we also now have commercial dialogues for the first time between Indonesia and the US and this reflects the commitment of both sides to strengthen their commercial relationship with each other.

Is there any certain target set for trade in the next few years?

Yes, there's a target to double the trade figure and it was mentioned in the joint statement between President Obama and President Yudhoyono when they met in 2010. So, there's a target of doubling the figure in five years.

I'm not sure there's a specific target on investment, we just said "enhance it". We definitely want more American investment. President Obama stated he didn't like being number three, so I'm sure America will want to be the number one investor again. But to do that, they have to really compete with the others and we also have to provide the corresponding facilities to get more American businesses to come in.

What is currently the biggest hurdle to American investment in Indonesia?

I don't think there's a major hurdle. I think it's just a matter of getting more people to know about what the opportunities are. For example, on the master plan [for the acceleration and expansion of Indonesian economic growth, MP3EI], there are a lot of projects and capital needed. Some American companies are learning more about it and some are trying to take part in it.

I think an opportunity that Indonesians should see is the US Ex-Im [Export-Import] Bank. The Ex-Im Bank had a great success story with the Lion Air deal. It financed Lion Air's purchase of Boeing and in fact, the last one was the biggest deal ever made by Boeing.

But the problem is the success story is very limited. There's been only very few Indonesians who are taking the advantage of the financing facilities of the Ex-Im Bank. I hope more Indonesians will take advantage of this facility.

Are there any American companies that have expressed an interest in joining the master plan for economic development?

Well, there are a few, but I am not sure I should name them before everything is signed. Every time we see American companies we tell them about the project.

In what sectors are they most interested in?

There are some discussions on the industrial parks. I believe there's something also in transportation, if I'm not mistaken, and infrastructure, obviously.

At this time they have been quite heavy in mining. Obviously we welcome their investment in mining, but we want their investment to be broader, more than just in mining. We want them to be in manufacturing, for example.

This is one thing that we've been trying to galvanise in terms of our relationship with American business. In agriculture and geothermal sectors, there are a lot of opportunities.

US business is also trying to get into the creative industries. I think this is one of the areas that need to be explored more: how American innovators can connect with Indonesian innovators. We've had the recent success story of Koprol, an Indonesian company that just joined Yahoo.

When I asked Yahoo how they saw Indonesians working in Koprol, they said they were as good as their own people in Silicon Valley. So again, the IT cooperation between the two is an exciting example, but getting together the innovation communities on both sides and trying to draw connections between them is one of the areas that we need to intensify.

How do you see the prospects for Indonesian exporters to boost their trade to the US in the near future?

The prospects are quite good. As I said, they need to be more aggressive and seek out more opportunities. There's Ex-Im Bank when they need some financing and the GSP facilities can help them. There's always opportunities to better penetrate the American market.

I think that we should take the benefits. The US palm oil market for example is 95 per cent controlled by Malaysians and we are only using 5 percent. We have to do a lot more for it.

In the furniture sector, there are also many opportunities. Our furniture is first class but the problem is how we convey that message. We're taking part in some trade fairs in the US this year, but we need to do better in how we handle those fairs.

Sometimes when we do the trade fairs, we have the products but the companies don't take part. And when the people want to buy the product, they can't negotiate with the companies because no representatives from the company are taking part. Small things like that sometimes can make a big difference.

And again, one thing that we need to fix is that there are extremely few upscale Indonesian restaurants in the US. Again, I don't know why. But Indonesian restaurants can function as a good ambassador for our country and even for tourism promotion.

The Indonesian business community should be more aggressive in penetrating the American market. These may not be big investments, but yes, there are a rising number of Indonesians who are investing in the US.

Loading...

Editor’s note:Yahoo Philippines encourages responsible comments that add dimension to the discussion. No bashing or hate speech, please. You can express your opinion without slamming others or making derogatory remarks.

  • EU threatens Thailand with seafood ban over illegal fishing
    EU threatens Thailand with seafood ban over illegal fishing

    BRUSSELS (AP) — The European Union has given Thailand six months to drastically increase its crackdown on illegal and unregulated fishing or face an EU seafood import ban, but has lifted the threat of similar action from South Korea and the Philippines. …

  • Pinoy team wins global disaster preparedness competition

    The Philippines was one of the big winners at the 2015 Global Innovation Competition last week for a cloud-based information system for disaster. The project, called "Balangay," is the brainchild of cousins Frei Sangil and Paolo Sangil. …

  • How Asia uses Bitcoin in one color-coded map
    How Asia uses Bitcoin in one color-coded map

    Bitcoin is a global phenomenon, but not everyone around the world uses it in the same way. Here in Asia, the way a person from the Philippines uses bitcoin is probably very different from how it’s used in Thailand, and both are very different from the typical user in Taiwan. Despite bitcoin being hailed as …

  • Pacmania sweeps Philippines ahead of Mayweather clash
    Pacmania sweeps Philippines ahead of Mayweather clash

    Manny Pacquiao's face is on shirts, dolls and postage stamps, his life story is playing in movie houses and millions are getting ready to party as the Philippine boxing hero's "fight of the century" nears. Pacmania is sweeping the Southeast Asian nation of 100 million people ahead of the May 2 Las Vegas bout against unbeaten Floyd Mayweather to decide who is the best boxer of their generation. Of course, it's the fight of the century," Manila film producer Lucky Blanco told AFP. …

  • Manila 'cute little submissive' of US: China media
    Manila 'cute little submissive' of US: China media

    The Philippines is nothing more than the "cute little submissive" of the United States, a Chinese tabloid with close ties to the ruling Communist Party said on Tuesday, criticising Manila for military exercises with Washington. The English-language editorial came a day after the Philippines launched giant 10-day war games with the US and Australia, partly aimed as a warning shot to Beijing amid competing claims in the South China Sea, home to vital shipping routes. "Of all the countries …

  • Philippines seeks more military aid from US to counter China
    Philippines seeks more military aid from US to counter China

    The Philippines said Tuesday it would soon ask the United States for more military equipment and training to build its defences, as it faces Chinese "aggressiveness" in disputed waters. As hundreds of Filipino and American Marines simulated an amphibious assault to reclaim territory from invaders during annual war games, military chief General Gregorio Catapang told AFP he was drafting a "wish list" for US aid. Catapang said the Philippines would ask for "equipment and training", when Foreign …

  • Philippines accuses China of turning water cannon on its fishing boats

    Filipino activists denounced China's coast guard on Tuesday for turning water cannon on Philippine fishing boats in disputed waters, near where hundreds of Filipino and American Marines landed on a beach in a mock assault.     The presidential palace in Manila said China's coast guard used water cannon on Monday to drive away a group of Filipino fishermen at Scarborough Shoal, damaging some of their wooden boats. Chinese ships rammed a fishing boat in the area a few months back. China in …

  • Ex-Cavite governor gets PCSO top post
    Ex-Cavite governor gets PCSO top post

    After nearly a year, President Aquino finally made good his promise to a long-time ally – former Cavite governor and congressman Erineo Maliksi – to head the Philippine Charity Sweepstakes Office (PCSO), replacing Margarita Juico who resigned in May 2014. Maliksi must be officially elected by the PCSO board members as their chairman. Prior to his appointment to the PCSO, Maliksi faced graft charges before the Sandiganbayan in connection with the alleged illegal purchase of P2.5 million worth …

POLL

Should Aquino be held accountable over the Mamasapano operations?

Loading...
Poll Choice Options